Presentation Title

Trade and food price volatility in Africa

Presentation Type

Oral Presentation

Keywords

food price volatility, trade volume, price hike, Africa

Department

Economics

Major

Political Science, Economics

Abstract

Africans who spend an average of 25 to 50 percent of their income on food are disproportionately affected by changes in food prices. The food price hikes of 2007-08 were one such period that generated greater unpredictability for poor families to plan their daily expenditures. In this paper, we examine whether volume of traded agricultural products may affect food price volatility in Africa. We hypothesize that a greater volume of crops traded leads to greater supply of close substitutes, thus resulting in lower food price volatility. Trade volume is analyzed at 2 levels: the international and country levels. At the international level, we find weak evidence for this theory, and for all crops except rice, lower food price volatility correlates with lower, not higher trade volume. At the country level, the relationship between trade volume and volatility is as predicted by the hypothesis, but is only statistically significant for rice. Future research may seek to test the reverse of this hypothesized relationship using lagged trade volume as affected by price volatility.

Faculty Mentor

Michael Olabisi

Funding Source or Research Program

Academic Year Undergraduate Research Initiative

Presentation Session

Session C

Location

Plaza Classroom 188

Start Date

24-3-2017 5:15 PM

End Date

24-3-2017 5:30 PM

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Mar 24th, 5:15 PM Mar 24th, 5:30 PM

Trade and food price volatility in Africa

Plaza Classroom 188

Africans who spend an average of 25 to 50 percent of their income on food are disproportionately affected by changes in food prices. The food price hikes of 2007-08 were one such period that generated greater unpredictability for poor families to plan their daily expenditures. In this paper, we examine whether volume of traded agricultural products may affect food price volatility in Africa. We hypothesize that a greater volume of crops traded leads to greater supply of close substitutes, thus resulting in lower food price volatility. Trade volume is analyzed at 2 levels: the international and country levels. At the international level, we find weak evidence for this theory, and for all crops except rice, lower food price volatility correlates with lower, not higher trade volume. At the country level, the relationship between trade volume and volatility is as predicted by the hypothesis, but is only statistically significant for rice. Future research may seek to test the reverse of this hypothesized relationship using lagged trade volume as affected by price volatility.